Benefits earned from university `justify fees rise'

THE MAIN benefit to the economy from investing in education is improved social mobility. But the amount individuals gain in increased incomes from higher education is big enough to justify charging students higher fees, according to new research published today.

However, while the private benefits are clear, and education clearly boosts upward mobility, the paper, published in the journal of the independent Institute for Fiscal Studies, finds little evidence of a link between education spending and economic performance. "It would be verging on the foolhardy to make policy on the strength of the estimates so far available," the report says.

Its authors, Jayasri Dutta of Cambridge University and Martin Weale of the National Institute of Economic and Social Research, single out reductions in primary school class sizes as particularly likely to give a poor return for public money, with improved teacher training likely to give the best returns. "Teaching teachers how to teach may be cheap compared with some of the other suggested ways of improving school quality."

The research found that - at least until the most recent expansion in student intake - students earn a return on their studies of up to 36 per cent in increased incomes.

Only for those taking subjects in the humanities is there a zero or negative return to higher education. Medicine, maths, design and business studies are among the subjects offering the highest boost to incomes. The authors state: "For any suitable individual, investment in higher education is a very good deal." They conclude that universities should be allowed to set their own top-up fees, as long as they offered a suitable range of scholarships for poorer students.

They point out that the UK spends less on education (as a share of national output) than any other OECD country:0.7 per cent of GDP goes on university education, compared with an OECD average of 1.5 per cent and 2 per cent in the US.

In addition, despite charging high fees, university education in the US creates more social mobility than the UK system. The fact that spending on higher education is so much greater in the US means it is easier for children to earn a lot more than their parents in the US than in the UK.